India, along with other developing economic systems, has been demoing the universe the manner out of the economic downswing. Performance on the undermentioned parametric quantities clearly shows this:
GDP: The Indian economic system clocked a growing of over 8.5 % in GDP in the last one-fourth. This was substantiated with a steady 7 % growing in the old financial. Economic growing is expected to better significantly in FY11 as the private sector demand – both ingestion every bit good as investing – begins to pick up. The factors that have contributed to this growing are:
The lowering of involvement rates
Rise in disbursement on substructure
Improved industrial growing backed by addition in ingestion demand
High growing in the investing activity
Inflation: RBI has taken it upon himself to stomp down dual digit inflationary figures. The rising prices rate was close to 13 % in May 2010. The non-food rising prices has gone up and demand side force per unit areas are high. The RBI is expected to assail rising prices with containment propaganda. The improved growing rates have to be matched with decreased rising prices and therefore aggressive fastening steps can be expected.
The rupee is forecasted to appreciate from the current degrees backed by expected foreign fund influxs and betterment in growing chance of the Indian economic system. These growing chances are expected to come chiefly from increased private ingestion and investing.
Industry Analysis: Media & A ; Entertainment in India
Estimated Size ( Year 2009 ) :
Television: Rs 257 billion with growing at 6.6 %
Print Media: Rs 175 billion with growing at 1.7 %
Film Entertainment: Rs 89 billion with a dip of 14.1 %
Radio: Rs 8 billion
Size: Rs 587 billion ( 2009 )
CAGR of 10 % over 2006-2009
Media spend in India as a per centum of GDP is 0.41 %
Miniscule as compared to Media Industry globally
Immense growing potency
Current media spend per capita for India is really low: US $ 4 compared to the other states with China: US $ 27
The Media & A ; Entertainment industry has been affected by the economic lag
Ad grosss have dropped and investings have besides reduced
This hit has taken topographic point non merely in the telecasting and print media section but besides the movie industry
But now, with the economic system lifting once more, the sum spent on advertisement is bound to increase. The acceptance of CAS and DTH and an increasing sum of digitisation will increase the subscription grosss which would impel the net incomes every bit good. Another consequence of the resuscitating economic system would be that the disposable income with companies would increase which would increase the company spends and thereby take to farther growing. The section is all set for higher and faster growing.
Harmonizing to a PricewaterhouseCoopers study:
The Indian M & A ; E industry is expected to turn at a CAGR of 12.4 % over the following 5 old ages to Rs 1,04,080 crore
Television industry: Estimated growing of 12.9 % cumulatively over the following 5 old ages, to make Rs 48,800 crore by 2014 from Rs 26,550 crore in 2009
Movies industry: Projected to turn at 12.4 % over the following 5 old ages, making Rs 17,050 crore in 2014 from the present Rs 9,500crore in 2009
With the reaching of the Union Budget 2010-11, there has been good intelligence for the Media & A ; Entertainment sector. Service Tax freedom has been provided to recognize new bureaus in the state.
Besides, the transition of companies into LLP ( limited liability partnership ) has gained freedom from capital additions revenue enhancement. This peculiar freedom may non hold a really big impact because this freedom has been extended merely to really little companies in the sector which have a turnover of less than Rs 60 hundred thousand.
About the Company: Balaji Telefilms Ltd.
Balaji Telefilms was founded in 1994 and has played a major function in altering the face of Indian telecasting since that clip. The company began their operations during the fiscal twelvemonth 1995-96 with a fiction thriller Mano Ya Na Mano and rose to fame with hit shows like “ Hum Paanch ” , but it was in the late ninetiess and 2000s that the company scaled new highs.
Balaji Telefilms Ltd is the state ‘s prima amusement content supplier. It has a solid substructure of around 32 province of the art studios. The company is into the concern of bring forthing seriess in Hindi, Telugu, Tamil, Malayalam and Kannada linguistic communications. Their plans have appeared in the top 50 plans on all major telecasting channels on a consistent footing.
A In 2004-05, Balaji ventured into the production of low budgeted films with ‘Kya Kool Hain Hum ‘ . Today, the company occupies a dominant infinite in the telecasting content creative activity infinite, with the No.1 show on Indian telecasting to its recognition and all of its shows among the Top 50 on telecasting. Balaji has now diversified by puting in gesture images, cyberspace and nomadic infinite. The company has been germinating with clip and has corporatized itself to a big extent, organizing the function of a Group CEO along with an experient professional squad meant to drive the hereafter strategic way of the company.
A 15 % autumn in scheduling hours ; 23 % diminution in realisations for commissioned programmes:
Fall in Operational Revenues by 36.8 % YoY ( and 17 % QoQ ) to Rs335mn
Realizations have reached a threshold and are expected to remain changeless over the following few old ages
Balaji has had a negative operating net income for the 3rd one-fourth in sequence. This has once more mostly happened due to take down scheduling hours
Though, with an upturn in the economic system, the worst is over for the company, several issues remain. Many new seriess are yet to be launched and it remains to be seen how they will execute.
Two new films coming up:
Once upon a clip in Mumbai ( July terminal )
Shor ( September )
Venture into Hoonur: an on-line portal for media professionals and amusement consumers
This shows that the company is trying variegation to minimise hazards due to downturns
Projected figures for the following four old ages:
Cost of gross revenues ( crores )
Operating net income ( crores )
Adjusted PAT ( crores )
Nonrecurring points ( crores )
Net Net income
EPS ( TTM )
Div ( % )
The current P/E ratio of the stock is 39, while the industry P/E is 31.
The P/E ratio of the industry every bit good as the stock has seen a rush last twelvemonth owing to dropping net incomes.
However due to the betterment in operational parametric quantities like revenue/programming hours we expect the P/E to come down in FY11.
With a jutting P/E of 15 the monetary value of the jutting monetary value of the stock is 38. At the current monetary value of 55, this is a SELL.
However we see that the projections for FY12 onwards show a strong addition and therefore the evaluation can be upgraded to keep so.